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US Government Action on Anonymous Companies is Crucial in Global Effort to Fight Corruption

04/30/2019

The United States faces an important choice: step up efforts to tackle money laundering and financial crime, or be left behind the European Union and others. Today, 12 civic leaders and CEOs from The B Team are urging members of the United States Congress to support crucial legislation that will curb the use of anonymous companies. These civic and business leaders, including CEOs of major multinationals, have made it clear that the proposed Corporate Transparency Act of 2019 is an important way the US can contribute to the global effort to fight corruption by requiring companies to report their ownership to authorities at the time of incorporation.

The US has become one of the easiest places in the world for money launderers, criminal organizations and terrorist groups to hide money, as research has shown. Anonymous companies have long been a core element in facilitating crime and corruption, particularly cross-border illicit financial flows, making this important legislation long overdue. A recent report found that, in the US, a person needs to provide far more personal information to obtain a library card than to create a company.

Collecting beneficial ownership information will not only enhance anti-money laundering and anti-corruption efforts, but also build cleaner, more competitive markets. The Corporate Transparency Act provides a much needed basic level of accountability regarding corporate ownership without creating a costly burden on business.

The introduction of this legislation comes as the call for a global norm on transparency in company ownership is gaining momentum. In 2016, the United Kingdom implemented its public beneficial ownership register. The European Union has taken similar steps with the Fifth Anti-Money Laundering Directive, which includes a provision for all member states to establish public registers of beneficial ownership by 2020. A range of countries, from Ghana, Kenya and Nigeria in Africa to Norway and Ukraine in Europe have committed to opening up company ownership information through such initiatives as the Open Government Partnership. The Corporate Transparency Act of 2019 is crucial if the US is to keep pace with the rest of this world on this issue—and remain a leader in efforts to fight global financial crime.

We are writing to express our support for the Corporate Transparency Act of 2019 recently proposed in the 116th Congress. We have previously expressed our support for the collection of beneficial ownership information and are encouraged by the bipartisan support for this measure, which is an important step forward to ensure the transparency of company ownership in the United States.

Collecting beneficial ownership information will enhance anti-money laundering and anti-corruption efforts and provide for cleaner, more competitive markets. The significant benefits of disclosing this information far outweigh any incremental cost of providing this information. In its current form, the bill provides a much needed basic level of accountability regarding corporate ownership without creating a costly burden on business.

We have seen progress on this issue in other jurisdictions where our companies operate.

In 2016, the UK implemented its public beneficial ownership register. The European Union has taken similar steps with the Fifth Anti-Money Laundering Directive, which includes a provision for member states to establish public registers of beneficial ownership by 2020.

Beneficial ownership information will provide greater assurance for companies when entering business relationships, offer a tool for mitigating risk throughout our supply chains and give management and our investors more certainty when addressing risk and allocating capital.

It has been well-documented by the Organization for Economic Cooperation and Development (OECD), the World Bank, IMF and others that corruption impedes capital formation. The collection of beneficial ownership information in the United States would contribute to ending the anonymous companies that make it so hard to follow the money when it comes to corruption, fraud, and tax evasion. Indeed, this information is disruptive to existing illicit financial structures and arrangements. Clarity about the ultimate beneficial owners of companies reduces conditions of instability and uncertainty that impede stable, prosperous markets where we operate. It creates an environment where our businesses, business partners, employees and customers can thrive and succeed.

This bill, with the requirement to name the true owner of a company at the point of formation, is a remarkably simple yet effective way to directly address these concerns.

We write to urge you to support this legislation to require the collection of beneficial ownership information. As business leaders, we believe that clarity on company ownership is critical. It makes the United States and US firms competitive, helps law enforcement prevent, detect and prosecute financial crime and builds the transparency and trust that benefit both society and business.